2013年1月23日星期三

Chinese Tourists Ditch the Eiffel Tower for Shopping

Move aside Mona Lisa. More Chinese visitors are headed to Paris and they are picking luxury stores such as Galeries Lafayette over visits to the Louvre.

Europe will be among the top destinations for the 94 million mainland Chinese who are expected to travel abroad by 2015, according to McKinsey & Co. Their tour-group itineraries are showing day-long trips to luxury outlets — squeezing short visits to the Eiffel Tower and Louvre museum in between.

By turning their holidays into lengthy shopping excursions, the Chinese are propping up European sales and aiding the outlook for brands from Prada to PPR’s Gucci, even as the euro area faces a second year of economic contraction. Close to a third of Chinese luxury buyers will shop in Europe in 2013, McKinsey estimates, up from a fifth last year.

“Consumption is happening more and more outside than within China,” said Erwan Rambourg, HSBC Holdings’ head of consumer and retail research in Hong Kong. “It’s cooler to say you bought a Vuitton handbag in Paris than in China.”

At Harrods department store in London’s upscale Knightsbridge district last summer a sign welcoming Chinese visitors was prominently displayed at the entrance, and some employees milled about wearing badges that asked “Can I help you?” in Chinese. London-based Burberry Group has doubled the number of Mandarin-speaking staff in Europe in the past 12 months, chief financial officer Stacey Cartwright said.

‘Love story’

“We have a love story between us and the Chinese,” said Desiree Bollier, chief executive of Value Retail, which has nine Chic Outlet “shopping village” outlets in Europe selling brands from Dolce & Gabbana to Jimmy Choo.

That’s hardly surprising when Chinese visitors to Europe, Hong Kong or Singapore spent 11,000 euros ($14,700) on shopping per trip, according to a survey published last year by Global Blue, the world’s biggest operator of tax-refund points for tourists. Chinese buyers now account for 25 percent of global luxury spending, from 10 percent three years ago, according to a September HSBC Global Research report.

Value Retail opened its center in Madrid two hours early to cater to a group of 1,500 Chinese tourists, and added faster choices such as pasta and salads in its restaurants after noticing that mainland visitors don’t want meals eating up shopping time.

Helping drive the overseas purchases are China’s import taxes on luxury items and added rebates on European taxes available to non-residents. The cost of 20 luxury items in China, including bags and watches, was 72 percent higher than in France and 45 percent higher than in Hong Kong, according to a 2011 survey by the Ministry of Commerce.

Grand tour

Chinese from richer cities are also picking Europe and the United States over nearby Hong Kong as they seek out new experiences, according to UBS Securities.

“If you travel to Hong Kong three times a year and you’ve done that for the past three years, you probably feel your next trip should be somewhere else,” said UBS analyst Spencer Leung.

Less affluent shoppers, who prefer smaller items such as belts and small handbags, are filling Hong Kong’s void, he said. Almost three million Chinese visitors a month arrived in the city of seven million people, government data show.

Madding crowd

“There are too many tourists shopping in Hong Kong these days,” said Summer Xia, a 35-year-old finance executive from Zhejiang province on China’s eastern coast who travels at least once a year to Europe or the United States to shop. “I can save up to 40 percent on some luxury items.”

Xia said she spends as much as 300,000 yuan ($48,200) a trip, and past purchases have included Harry Winston diamond jewelry and an 80,000 yuan red Hermes Birkin bag.

Chinese visitors like her will contribute about a third of luxury sales in Western Europe this year, Credit Suisse Group forecasts. That is helping to insulate the industry from a second year of economic contraction in the Euro area.

Milan-based Prada’s sales rose more than 40 percent in Europe in the first nine months of last year. Louis Vuitton sales rose 9 percent in Europe between January and September, outstripping Asia’s 5 percent.

Success for the luxury industry in Europe does create its own problems, not least of which is the prospect of stores in China becoming “empty showrooms,” HSBC’s Rambourg said.

To narrow the gap with China, Louis Vuitton raised prices 8 percent in Europe. Put them up too much and brands risk alienating local shoppers, Rambourg said.

“You don’t want to appear to be a brand that only sells to Chinese or only to Brazilians or Indonesians in 15 years time,” he said. “The idea is to be global and present some interest to all different nationalities. That’s where you get your pricing power.”